Case Digest: Mayon Hotel & Restaurant v. Adana, G.R. No. 157634, May 16, 2005

  Labor Law | Facilities, Supplements

Facts: 

Mayon Hotel & Restaurant, managed by Josefa Po Lam, employed sixteen employees.

Due to lease contract expiration, the hotel operations were suspended. When operations continued in its new location, only nine employees were retained.

The 16 employees filed complaints for underpayment of wages and other money claims against the owners.

Petitioners argued that the cost of food and snacks provided to respondents as facilities should have been included in calculating their wages. They invoked Sections 5 and 6, Rule VII-A, which allow the deduction of facilities provided by the employer through Facility Evaluation Orders by the DOLE Regional Director. 

Petitioners also claimed to provide five percent of the gross income monthly as incentives.

LA:  Rejected the deduction of meal costs as part of respondents' wages.

NLRC: Reversed the decision, dismissing all complaints.

CA: Reversed NLRC’s decision, supporting Labor Arbiter’s findings.

Issue: 

WoN the cost of food and snacks provided to respondents as facilities should have been included in calculating their wages. NO

WoN the five (5) percent of the gross income of the establishment can be considered as part of the respondents' wages. NO

Held:

The cost of meals and snacks purportedly provided to respondents cannot be deducted as part of respondents' minimum wage. As stated in the Labor Arbiter's decision:

While petitioners submitted Facility Evaluation Orders issued by the DOLE Regional Office whereby the cost of meals given by petitioners to respondents were specified for purposes of considering the same as part of their wages, We cannot consider the cost of meals in the Orders as applicable to respondents. Respondents were not interviewed by the DOLE as to the quality and quantity of food appearing in the applications of petitioners for facility evaluation prior to its approval to determine whether or not respondents were indeed given such kind and quantity of food. Also, there was no evidence that the quality and quantity of food in the Orders were voluntarily accepted by respondents. 

On the contrary; while some of the respondents admitted that they were given meals and merienda, the quality of food served to them were not what were provided for in the Orders and that it was only when they filed these cases that they came to know about said Facility Evaluation Orders. Petitioner Josefa herself, who applied for evaluation of the facility (food) given to respondents, testified that she did not inform respondents concerning said Facility Evaluation Orders.

Even granting that meals and snacks were provided and indeed constituted facilities, such facilities could not be deducted without compliance with certain legal requirements. As stated in Mabeza v. NLRC, the employer simply cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. The records are clear that petitioners failed to comply with these requirements. There was no proof of respondents' written authorization. Indeed, the Labor Arbiter found that while the respondents admitted that they were given meals and merienda, the quality of food served to them was not what was provided for in the Facility Evaluation Orders and it was only when they filed the cases that they came to know of this supposed Facility Evaluation Orders. Petitioner Josefa Po Lam herself admitted that she did not inform the respondents of the facilities she had applied for.

Considering the failure to comply with the above-mentioned legal requirements, the Labor Arbiter therefore erred when he ruled that the cost of the meals actually provided to respondents should be deducted as part of their salaries, on the ground that respondents have availed themselves of the food given by petitioners. The law is clear that mere availment is not sufficient to allow deductions from employees' wages.

More important, we note the uncontroverted testimony of respondents on record that they were required to eat in the hotel and restaurant so that they will not go home and there is no interruption in the services of Mayon Hotel & Restaurant. As ruled in Mabeza, food or snacks or other convenience provided by the employers are deemed as supplements if they are granted for the convenience of the employer. The criterion in making a distinction between a supplement and a facility does not so much lie in the kind (food, lodging) but the purpose. Considering, therefore, that hotel workers are required to work different shifts and are expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a small hotel, such as petitioners' business. The deduction of the cost of meals from respondents' wages, therefore, should be removed.

We also do not agree with petitioners that the five (5) percent of the gross income of the establishment can be considered as part of the respondents' wages. We quote with approval the Labor Arbiter on this matter, to wit:

While complainants, who were employed in the hotel, received various amounts as profit share, the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. Although called profit share, such is in the nature of share from service charges charged by the hotel. This is more explained by respondents when they testified that what they received are not fixed amounts and the same are paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, petitioner] failed to submit evidence that the amounts received by respondents as profit share are to be considered part of their wages and had been agreed by them prior to their employment. Further, how can the amounts received by respondents be considered as profit share when the same are based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross receipt of an enterprise. Profits are realized after expenses are deducted from the gross income.

On the issue of the proper minimum wage applicable to respondents, we sustain the Labor Arbiter. We note that petitioners themselves have admitted that the establishment employs "more or less sixteen (16) employees," therefore they are estopped from claiming that the applicable minimum wage should be for service establishments employing 15 employees or less.

As for petitioners repeated invocation of serious business losses, suffice to say that this is not a defense to payment of labor standard benefits. The employer cannot exempt himself from liability to pay minimum wages because of poor financial condition of the company. The payment of minimum wages is not dependent on the employer's ability to pay.